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Adastra Minerals directors urge rejection of First Quantum's £94 million bid, which First Quantum says it is 'disinclined' to improve.

Toronto and AIM-quoted First Quantum, whose Zambia and Congo copper projects have made it a star AIM performer, is offering one of its own shares, now £18.75p, for every 17.5 of fellow AIM counter Adastra shares, currently 124.5p. That implies a discount of around 11.5 per cent, but First Quantum's president Clive Newall says 'we are still disinclined to change our bid'.

At the heart of the bid is Adastra's rich Kolwezi copper tailings project in Congo's mineral-rich Katanga province. Adastra, headed by Tim Read, a former Rothschild mining financier, argues that First Quantum's bid offers Adastra shareholders only seven per cent of a combined First Quantum/Adastra's equity, though by 2009 Kolwezi would contribute some 21 per cent of its copper equivalent production and 45 per cent of its copper equivalent recoverable resources.

Adastra, advised by Read's old house of Rothschild, also complains that the value of First Quantum's bid, being all in shares, is subject to the vagaries of stock market fluctuations. Adastra is also playing another card with news that Japanese giant Mitsubishi has agreed to buy a 14.9 per cent stake in Kolwezi in exchange for £20 million cash, £7 million of loans to the project and completion guarantees to other project lenders.

Newall says Adastra's response and the Mitsubishi deal 'did not come as a surprise. They are bridging a big funding gap'.

The first closing date for First Quantum's bid is 10 March, though that is likely to be extended for a few days to allow an Adastra share scheme to go through. It is unlikely that this will be the last word and shareholders should hold on for now.